UAW, Fiat Chrysler Reach Tentative Labor Agreement
Health Care Pool, Two-Tier Wage Phaseout Major Topics
In a somewhat surprising move, the United Auto Workers (UAW) selected Fiat Chrysler Automobiles (FCA) as the target company for this year’s contract negotiations. Many industry watchers were expecting Ford Motor Company to be the target. However, from the union’s perspective, it’s easy to see why FCA was the target. Of the Detroit Three, FCA has the highest percentage of so-called Tier-Two hourly employees at 45 percent, compared to 20 percent at General Motors and 28 percent at Ford. The UAW has been seeking to phase out or eliminate the two-tier wage structure almost since its inception, a concession made during the automaker bankruptcies of 2009. In an unusual gesture of cooperation and solidarity, FCA CEO Sergio Marchionne and UAW President Dennis Williams held a joint press conference announcing a tentative deal had been reached, The Detroit News reports.
The deal will not fully go into effect until a majority of UAW workers vote yes on the deal. Specifics of the agreement were not released and will not be public until they have been communicated to the union’s membership. In addition to the phase-out of the two-tier wage structure, another major issue discussed was the formation of a health care pool covering all UAW workers, essentially an expansion of the Voluntary Employees’ Beneficiary Association (VEBA) plan the automakers agreed to as part of the 2009 industry restructurings. Although Ford didn’t not go through a formal bankruptcy like GM and Chrysler, Ford was one of the leading advocates and architects of the VEBA plan six years ago. The proposed health care pool would cover all three automakers, with the idea of lowering costs by spreading the risk pool. If the FCA deal is approved by its membership, it will set the stage for contract negotiations with Ford and GM in the weeks ahead.
Source: The Detroit News